Aviation Taxes, Consumer Protection Rules & WiFi

Aeromexico

Travel Industry Opposes New Aviation Taxes
Both the aviation industry and travel and tourism industries are opposing the President Obama’s plan to impose $3.5 billion annually in new taxes on airlines and their passengers to help pay off the country’s budget deficit. A major bone of contention: an increase in the Aviation Passenger Security Fee.

The proposal would up it to $5 per flight. It had been $2.50 per flight segment, for a maximum of $5 per one-way trip. The fee would then increase by 50 cents each year through 2017, maxing out at $7.50. Fifteen billion dollars of the new taxes would go into the General Fund for debt reduction, with any money beyond that going toward the Transportation Security Administration´s (TSA) discretionary appropriations.

The Air Transport Association says fee increases will force airlines to raise fares or reduce service, which will mean fewer jobs. According to the ATA, federal taxes and fees in the United States account for $61, or 20%, of the cost of a typical $300 domestic round-trip ticket.

The U.S. Travel Association, a travel industry advocacy group, also opposed the tax, saying that any increase in travel fees should be invested directly into the national travel system and infrastructure. The travel industry in general has taken the position that governments are responsible for national security costs, not specific industries. (Source: ATA and USTA press releases).

Airlines Lose Bid to Delay Implementation of New Consumer Protection Rules
Three low-cost carriers lost their legal challenge of new Department of Transportation consumer protection rules scheduled to go into effect Jan. 24.

The U.S. Court of Appeals in the District of Columbia denied Southwest Airlines, Spirit Airines and Allegiant Airlines’ attempt to block a rule that would require them to include all taxes and fees in the fares they advertise instead of breaking them out separately. The airlines say that they differentiate themselves with low fares and want consumers to know how much of what they pay goes to taxes.

Airlines also asked the court to review a ban on raising airline prices after consumers buy their ticket. And they protested the new rule requiring airlines to let consumers cancel a flight without penalty within 24 hours of booking that flight.

Many airlines, already do this; including American Airlines, Continental Airlines, Delta Air Lines, Frontier Airlines and US Airways. But Spirit says that consumers will abuse this and the result will be higher ticket prices. The court denied the airlines´ challenge, saying that they had not met stringent requirements for such as stay. (Source: court documents).

Airlines Lose Bid to Delay Implementation of New Consumer Protection RulesAirlines Lose Bid to Delay Implementation of New Consumer Protection Rules
One in five users of Gogo inflight internet service say that they’ve switched carriers because they´d rather be on flights with inflight internet service, according to a survey of 7,000 Gogo users. Inflight Wifi is particularly important to business travelers, according to Gogo, which provides inflight Wifi to eight airlines. Three airlines have Wifi on their entire domestic fleet: AirTran Airways, Delta Air Lines and Virgin America. Five more have it on select aircraft; they are: Air Canada, Alaska Airlines, American Airlines, United Airlines and US Airways. (Source: Gogo press release).

Pace of Air Travel Growth Starts to Slow
As expected, passenger air travel growth began to slow in August, according to numbers just released by the International Air Traffic Association. Passenger demand was up 4.5%, less than the 6% July increase.

North American carriers reported the weakest performance with growth of just 2.9%, which was partly a result of equally slow growth in capacity. This is a sharp downturn from stronger growth earlier in the year, as reflected in the 5.6% year-to-date demand expansion. However, North American carriers had the highest load factor at 86.1%. (Source: IATA press release).